Airbus sales chief doubles-down on CSeries attack

By Stephen Trimble2016-05-31T07:40:07+01:00

Airbus’ top salesman is doubling-down with his long-running attack on the Bombardier CSeries family, arguing Delta Air Lines’ recent order for what he calls the “cute, little airplane” is not the breakthrough order that his Canadian competitor claims.

“They can’t make a business about losing $7 million an airplane,” Leahy told reporters on 30 May on the sidelines of Airbus Innovation Days.

Leahy was referencing Bombardier’s financial statement in late April that warned the company must provision in the second quarter for a $500 million loss. The provision referenced the last three combined orders for the CSeries totaling 127 aircraft, implying a $4 million average loss per unit sold. Leahy’s $7 million with loss figure included only the Delta order for 75 CS100s, however.

Leahy says Airbus was not involved in the Delta acquisition process, saying it was a contest with only Embraer that Bombardier won by offering an unusually low price for the CS100, which has an official list price of $62 million.

“I could easily sell [the CSeries] for the $22 million or whatever they sold it for,” Leahy says.

Delta and Bombardier have not disclosed the selling price for the CSeries, and Leahy admits he cannot confirm the actual amount. “That’s what I heard,” he says. “I don’t know it for a fact.”

The $500 million provision, which Bombardier linked to “onerous”, or loss-making contracts, implies that Bombardier accepted an overall loss on the last three deals.

“I was talking to a guy at Delta,” Leahy says. “He said, ‘I’ve never been called ‘onerous’ before.”

Leahy also provided some background on why Airbus passed on an opportunity to invest in the CSeries programme last year. Bombardier was offering the investment for a “song”, Leahy says, so the deal was seriously considered.

Airbus believed it could reduce the cost of making CSeries family aircraft by about 10%, Leahy says. Airbus also could offer Bombardier a global support network for the CSeries, he adds.

But Airbus Group chief executive Tom Enders argued against making the investment, Leahy says. Enders believed an investment in the CSeries would cause too much of a distraction for Airbus executives amidst the ramp-up of the A320neo family, A350 family and A330neo family, Leahy says.

Moreover, Leahy is highly sceptical that the CSeries will become a successful programme regardless of its recent sales victories. Leahy is unable to discuss Airbus pricing philosophy, so he referenced that of another competitor. Boeing, he says, would be happy to sell a 737 Max 7 in the high $30 million range or low $40 million range, with a healthy profit margin. Bombardier, however, would struggle to break-even on a unit basis with the CS300 in the same price range, he says.

Source: Cirium Dashboard

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